Disposable medical devices manufacturer Merit Medical Systems has signed a stock purchase agreement to buy GE Healthcare's US division, Thomas Medical Products, for $167m in cash.
Thomas Medical's commercial products include catheter-based vascular access delivery devices, designed for use in electrophysiology, cardiac rhythm management, interventional cardiology and interventional radiology devices.
Merit Medical Systems chairman and CEO Fred Lampropoulos said the acquisition will help the company expand into new product categories, particularly interventional cardiology.
"We believe substantial international expansion opportunities exist, especially in China, Japan, Russia and the Gulf States, as well as significant new product development opportunities based on know-how and existing intellectual property," Lampropoulos said.
"In addition, Thomas Medical has a number of existing electrophysiology products that are distributed by the larger medical device companies, as well as other EP products being developed
"We believe this segment of the business, which likewise represents potential expansion into new product categories, has the potential to be a driver of substantial future growth."
Merit anticipates that during the year end of 31 December 2012, Thomas will generate revenues of $37m and on a pro forma basis will have gross and operating margins of approximately 55% and 44% respectively.
The transaction is not subject to a financing condition, as Merit will finance the capital to expand its existing credit facility to $275m, which Wells Fargo Bank has committed to provide in a single bank transaction.
Subject to the satisfaction of certain closing conditions including clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions, the transaction is expected to be close prior to 31 December 2012.
GE Healthcare healthcare systems division president and CEO Tom Gentile said; "We are confident this transaction will provide Thomas Medical new capabilities to maximise its opportunities in the single-use vascular access product space and enable GE Healthcare's Cardiovascular segment to remain focused on its core strengths as a provider of total Integrated Cardiology Lab solutions."